Month: January 2016

Since PR is what you do and not what you say, this counts for terrible PR.  Not only is Theranos losing its biggest customer, it has been sanctioned by the FDA for dangerous laboratory practices in its California facility.  Not long ago, Theranos and its CEO were darlings of the media with a story of entrepreneurial pluck and luck.  Then, the Wall Street Journal revealed that its basic technology, which uses only a drop of blood, was flawed and gave misreadings.  That started a cascade of negative stories and investigations that have resulted in the FDA action and Walgreen’s departure.  There is only one solution to the bad news.  Fix the problems fast, whether or not one uses the micro technology, and report accurate results.  Either that, or watch the company disappear in a short time.

Lack of transparency in a business breeds rumors and misperception.  Consider this case.  Apple is hiding the results of its watch sales.  There is no good reason for the company to do so unless expectations have not been met.  Hence, the obvious conclusion is that its watches are not selling well and might be a commercial flop.  If they are a success, why should Apple hide?  Citing competitive reasons is not enough to convince anyone for long.  If they aren’t successful, Apple owes it to its shareholders to let them know.  As it was, the news for the company yesterday was not wildly good as it has been for quite some time.  News that its iPhone sales may have levelled off hit the market hard, but the company still performed well overall.  It still doesn’t excuse Apple for failing to report its watch sales.

This survey is discouraging.  It reveals that nearly half of companies that gather competitive intelligence rarely act upon it.  They have the tools to learn about the marketplace but they aren’t using them.  One shouldn’t be too surprised.  It is difficult to listen when one is convinced that he is ahead of the competition.  I saw this long ago in a high-tech company that was losing market share rapidly.  No one in top management paid attention to the marketing department’s reports, so when the company went off the cliff, management was caught unaware of what had happened.  Listening is humbling.  One is rarely as good as one thinks, and areas of perceived strength can be shown up as weaknesses.  Yet, honest CEOs find out what is happening in the marketplace.  They listen and decide on what to do with a picture of the whole field of competition.  They are inevitably practitioners of public relations in the best sense whether or not they have a PR department.

One difficult PR problem is uncertainty, particularly when it deals with management.  Consider this case.  The CEO is out ill and there is no time scheduled for him to return to work.  Yes, there are interim leaders but they can’t make major decisions.  Valeant hasn’t helped itself by staying silent on the CEO’s condition.  This only heightens uncertainty and fosters rumors.  It doesn’t help investors either who don’t know whether to stay with the company or to dump the stock.  PR at least should indicate publicly the progress of the CEO in returning to health, but the company sent a two-paragraph note to employees, which was leaked to the media.  This may be the way the CEO wants it, but it only heightens uncertainty.

PR practitioners are used to the irrational in daily affairs.  Commodity traders aren’t, but that is what is happening to them in the oil market.  Irrational price declines have entered a territory in which no one is sure where the bottom might be.  The interesting part of the fall is that it isn’t retail investors who are panicking in the market but hedge funds and experienced traders.  Supposedly the homo economicus would see price and demand and act rationally, but that isn’t the case.  Markets are moved by raw fear.  As experienced hands in dealing with irrational events, we can say to oil traders, “Welcome to the club.”

Volkswagen is saying that it cheated on exhaust emission tests in the US but not in Europe.  Who will believe them?  The company is about to learn the painful lesson of credibility.  Once lost, there is little one can do to win it back other than transparency and time.  Volkswagen will have to be extra diligent in the future in reducing emissions and may need a government presence in its engineering department to assure regulators that it is developing power trains that meet standards.  The company has so compromised itself that anything it does voluntarily may be met with skepticism.  It is a hard position to be in but Volkswagen did it to itself and has no one else to blame.

Microsoft is engaged in smart public relations with this announcement.  Donating a billion dollars in cloud services is a major step for the company and the thousands of not-for-profit organizations and academic institutions which will use it.  Make no mistake.  Microsoft isn’t doing this solely out of a philanthropic impulse.  It is trying to gain market share for its software and this is a way to do it — by reaching a market that hitherto couldn’t afford it. Once these organizations understand what the cloud can do for them, they will make it part of their operating budgets.  What could be better than that?  Microsoft gains kudos for its gift in the beginning and wins in the end.

When a large group of CEOs are dour about the future, it is worth paying attention.  That is the subject of this survey.  Top leaders don’t see a way forward this year.  Call it influential pessimism and negative PR.  It is hard for an optimist to overcome the negatives from those who make spending and buying decisions.  In truth, the sour feelings on the part of CEOs might be self-fulfilling.  They will cut back in the face of headwinds and thereby insure the storm will be all the stronger.  There isn’t much else they can do if their companies’ sales are sluggish and earnings flat.  They have to manage to make it through and not push forward to growth that isn’t there.  So, the globe starts the year under a cloud.  That doesn’t mean the CEOs are right.  Something could change in the next 11 months to shift their opinion, and if it does, it will prove that CEOs don’t have any better vision than anyone else.

Elon Musk of SpaceX has had bad luck with his rockets re-entries into earth’s atmosphere and touchdowns.  The latest missile fell over on an anchored barge.  Musk blamed condensation ice from the heavy fog in which the rocket was fired.  No matter what happened, Musk is facing a PR problem until he can get his stage ones to settle gently in an upright position upon re-entry.  No one argues that it is easy to do.  It is probably the hardest part of a launch likened to a juggler doing magic tricks while keeping balls in the air.  Musk, however, boasted that his company would master the technology.  He put himself in a position of peril by making the statement before showing the proof.  Thus far, one of his rockets has landed safely back on earth.  The others have crashed in one way or another.  That’s not a good record.

Oscar nominations were announced yesterday, and once again, blacks were shut out of the awards.  The fault, however, is not that of the Oscar nominators but of the type of movie being made.  The problem is systemic and goes back to writers and producers who develop and fund scripts as well as directors who cast them.  Oscars are symptoms of the underlying problem and not racist in themselves.  It is a challenge that will be dealt with over time and with pressure from minority groups to be included in filmmaking.  Still, the Oscars are taking a PR nick because of the situation, and there is nothing to be done to make it better.